Even though several reviews say it does not, it most certainly does. When you are typing at the bottom of the screen on the right side, there is a down arrow, hold it down and the on screen keyboard pops up, and lets you use the voice dictation.

The only way I have found so far to do this is to deactivate the keyboard by lifting up the iPad. Without the keyboard these letters can be accessed by holding the key down, but holding down the key doesn’t do anything with the keyboard.

It is possible to use the Smart Keyboard with these special characters. All you have to do is use the “Option” button and then press down a key. For example to get “œ” hold down “option” and press “q”. This works for a variety of characters but you might have to play around to find the right one. After that it is easy. For example I am learning German and now it is easy to incorporate umlauts. I just hold down “option” then press “U” and then the letter I want to add an umlaut to.

YES! I just switched from a first-generation 12.9" iPad Pro to a 10.5" iPad Pro. I was curious as well. In fact, I'm writing this answer on my new iPad Pro 10.5" using my old 12.9" Smart Keyboard. It absolutely connects and works.

The Smart Keyboard will only protect the front. The Apple Smart Cover will cover both sides, but doesn't sport a keyboard. I bought a sleeve that will hold the iPad + Smart Keyboard and protect the whole device.